Shadow banking has a history of helping out industries usually turned away by big banks. Crypto is no exception, and there’s one bank that’s been backing crypto for a long time, but that means its downfall could be catastrophic for the industry as a whole. In this video I give you the rundown on Silvergate, its history with crypto, and the ramifications that could come if it goes insolvent due to its involvement with FTX.
0:00 Intro
0:57 The Beginning
1:41 The Rabbit Hole
2:20 The Question Is…
2:50 The Big Break
4:11 Rise to Power
4:54 Banking on Bitcoin
5:53 First Mover Advantage
6:56 The Players
7:36 Problems
9:23 Trouble
9:56 FTX Details
10:35 Hot Water
11:10 Other Lawsuits/Rumors
12:14 Ample Liquidity
12:56 Repercussions
13:43 Can It Get Worse?
14:53 In Conclusion
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Industries like the Cannabis industry The crypto industry the adult industry They all have one thing in common Banks Do not like them what these Banks want To do is they want to force people to Fit inside of their pretty little box so They can work within their establishment Some Industries are forced outside of The norm because the banks just won't Serve them and this is where we see the Entrance of Shadow banking this is where People have to jump over hurdles just to Get banked and when they do that these Shadow Banks well they're not always Playing by the rules what if I told you The oldest banking crypto is a shadow Bank and it's about to go down today We're talking about silvergate let's get It Foreign Crypto my name is Ben make sure to smash That like button also make sure to Subscribe to the channel we need some Subscribers y'all uh okay so let's start By talking about the beginning where you Should start naturally of course uh when Crypto got started not many banks wanted To get involved with crypto just like we Were talking about these other Industries silvergate was the first bank To take that chance they've been in the World of crypto banking for over 10 Years now and many are just getting Started because they had a first mover
Advantage with their Tech they've got Over 1300 clients and who those clients Are you're gonna love it unfortunately For them these clients included FTX and Alameda research among others who Together had over 20 accounts with Silvergate I wonder if they've got some Accounts that weren't even in on the Bankruptcy that'd be interesting to see The rabbit hole SPF Elizabeth Warren I Can't even remember that guy's name but I like him the rabbit hole yes this is The bank the did ftx's Dirty Laundry Situation goes much deeper than anyone Thinks and the connection with FTX is Only a small part of the story that's How Wild this is just a few weeks ago Silvergate had the full attention Of Sinners such as John Candy that's his Name and Elizabeth Warren and since then Things have not been great for Silvergate they've been in the news There's been talks about insolvency the Connections between digital currency Group and Barry silbert and Genesis Trading they don't look good right now So here is the question that we need to Be thinking about I think I already know The answer in the next 10 years will Silvergate help crypto as much as it did In the last 10 years or will this Situation Spiral into the most cataclysmic Black Swan in the history of crypto if
Silvergate were to go down the effects That would have on the entire space well It may not be permanent but we'll be Feeling them for a long time so let's Talk about the big break Silver Gate Bank got started in San Diego in 1988 Formerly known as La Jolla bank they Made their way by taking a chance hmm Interesting they took a chance on crypto Wasn't the first chance they took this Company has a history of rolling the Dice they took a chance on up-and-coming Tech businesses from the late 80s to Early 2000s guys in the late 80s Tech Business was Rock 'em sock'em robots uh Their first Big Break was their Partnership with Qualcomm who was a Front-runner in Wireless technology Early on in the days of Wireless in a Much different landscape than you have Now and picking and betting on a winner Was much harder to do I remember when I Got my first cell phone it was an Erickson cell phone with powertel Service and powertel ended up folding And then powertell became voice stream And voice stream became what we have as T-Mobile the point is a lot of those Early companies they folded multiple Times but they bet on a winner this Partnership was essential for both Parties picking a winner of that size That early in the game of Wireless set Silvergate Bank on a path that would
Lead to much bigger and better things so They quickly began rising to power the Qualcomm partnership put silvergate on The map is the top dog to bang Bank big Tech not long after this deal they Quickly cut deals with other high Profile companies such as Intuit cyber Source and eBay think about that taking Big risks in the tech industry is silver Gates bread and butter and at this point They're a key player in the tech banking Game let's think about what's going on Right now with silvergate and the Contagion everyone was over leveraging And promising things that they didn't Have that's what has led us to this Gigantic collapse exactly what the Traditional Market the traditional Banks Do and nobody knows how to lend them out Like silvergate banking on bitcoin not Just a great documentary on Netflix uh One of the first ones I watched back in 2016 just like how they took chances on Tech the turn of the century it's Exactly what they did with crypto back In 2013. I was in crypto before silvergate bank That's one of my biggest flexes at this Point in time Bitcoin had a bad Reputation from its connection to the Silk Road obviously a drug website on The dark web where people would exchange Bitcoin for mostly weeds and shrooms I Think I don't know imagine the guy that
Paid 30 Bitcoin for some shrooms he's Still tripping to this day silvergate Saw past the noise and took a chance on Crypto they were the first bank to build A key infrastructure in crypto banking That opened the doors to a digital Revolution so silvergate not only are They becoming a big player they're kind Of leading the space in a sense when it Comes to pushing things forward they're Not afraid to get their hands dirty First mover Advantage people say that About Bitcoin right bitcoin's got the First mover Advantage it was before Ethereum before Litecoin before any Other coins of course Litecoin was a Fork the code of Bitcoin silvergate was No different 2013 they built a Proprietary payment platform called the Silver gate exchange Network AKA sin S-e-n the first of its kind the sin Created a real-time Network for Exchanges and institutions to trade Fiat For Bitcoin very revolutionary during This time this expedite I had the Adoption of Bitcoin at the time because Silvergate was the only regulated Bank To build this kind of tech there was no Other player in the game there was no Other gold to Silver if you will here so They've established themselves as a Company that is pushing the space Forward we know they're taking bets They're taking risks now they're
Creating Tech that nobody else has you Kind of start to see how silvergate Became the go-to bank so let's talk About who the key players are here when I tell you the names of all the players In crypto that rely on the sen every Single day your jaw might hit the floor You'd have to have a really long face Dovergate has over 1300 clients and some Of them in include Circle Kraken Grayscale Genesis global trading bid go Bitfinex paxos bittrex bitstamp Microstrategy Ledger X Gemini crypto.com And coinbase don't forget block fi Alameda and FTX you can see this Conglomerate of companies using Silvergate Bank what we're going to Start seeing is the overlap between all Of these companies hard to tell where One of these companies money ends and The next one starts so let's talk about The problems with the way that this is Set up so not worry anyone that a large Majority of Market manipulators are all Under the same roof now I can tell you That from things that I've been hearing It's not a fake thing there was a group Of large players in crypto that Literally were communicating back and Forth on how to manipulate the market Companies that you wouldn't think would Be working together working together to Market manipulate how can we prove every Transaction on the sen is legitimate now
What separates scn from Bitcoin or Blockchain is that it's not on Blockchain which means it's not Transparent it's not immutable it's not A locked Ledger what it is is its ones And zeros so when these institutions Were trading Fiat for Bitcoin on the sen Or the Silver Gate exchange Network how Do we know exactly that what was Happening was really what was going on In the back end with the money in the Crypto the lack of crypto regulation Puts a big Target on silvergate Bank we Know that there were just many Politicians who were sending letters out To many of these crypto Banks trying to Urge them to get out of the space if I Was a politician and want to go after Crypto I would go after a silvergate They have all the major players Underneath them silvergate was to ever Go completely insolvent it would be the Black Swan of all black swans also known As the blackest Swan it would be a big Problem if they ever got into trouble be A problem for them it'd be a problem for Coinbase be a problem for digital Currency group it would be a problem for All of us the effects and The Dominoes That would occur would not be good just A few months ago silvergate's website Featured a quote from Sam pingman freed That stated life is a crypto firm can be Divided up into before silvergate and
After silvergate obviously this quote is Not there anymore because everything About SPF has been purged from every Major crypto company silvergate though Well they were ftx's Number One banking Partner and this got them into serious Trouble you have to also think as we Walk through this all it takes is one Very bad player to ruin 10 years of a Track record FDX Alameda has over 20 Accounts with silvergate technically Speaking silvergate was the vehicle that FTX used to misappropriate user funds The traditional Banks do it all the time When a user bot crypto and fex it was Processed through silvergate and put Into alameda's bank account going into FDX Through silvergate Ending at Alameda they weren't even Letting the money touch your FTX account You understand that right this is why Fex can't pay back funds because they Never had them in the first place it was All going to Alameda on December 5th 2022 Senator Elizabeth Warren Traditional hater of crypto Senator John Kennedy and Congressman Roger Marshall Also had a detailed letter to silvergate Bank looking for answers about Silvergate's involvement with FTX they Also want to know about the 10 billion Dollars SPF secretly transferred Senator Warren stated silvergate appears to be
At the center of the improper transfers Of billions in FTX customer funds Americans need answers those guilty of Wrongdoing must be held accountable if There's one thing we know about Sam Bateman freed there's nobody that hates Giving an answer more than that guy There's other things going on in the Background as well silver Gates CEO Alan Lane quickly released a statement about Their involvement with FTX anticipating Probably other lawsuits fex represent About 10 percent silver Gates total Deposits the relationship with FTX was Limited to deposits no Bitcoin Collateralized loans because all the Customer Bitcoin was in Sam's Bitcoin Addresses he assured that their reserves Are back to one to one and their system Was designed to handle stress and Volatility But how much volatility are we talking Here in the response Allen Lane stated Silvergate's platform was built to Support our clients during times of Market volatility and transformation and The scen has continuing to operate as Design and without interruption as a Federally regulated banking institution That's well capitalized we maintain a Strong balance sheet with ample Liquidity to support our customers needs It's funny when Alan Lane says he's got A strong balance sheet nobody questions
It but when CZ said we are financially Strong everybody said that meant they Didn't have any money weird is there Ample liquidity to service The Market Within a few weeks the bottom fell out For silvergate on January 5th Silver Gate stock fell 45 in a matter of hours Because FCX went bankrupt silvergate was Forced to liquidate an insane amount of Their assets at a steep loss to cover 1.8 billion dollars worth of customer Withdrawals scariest part is 718 million They suffered in losses that came when They were forced to sell the bottom well It's far more than the profits that's Over gate bank has made since 2013. they had to pay more money out Than they made in basically 10 years Repercussions we love repercussions Right it's like when you have a Percussion and then you do it a second Time does that make sense while Scrambling for money silvergate was Forced to fire 40 percent of their Workforce which totaled to about 200 Employees in total they were also forced To ride off the 196 million dollars they Spend on diem which was a stablecoin Digital payments Network that they Purchased from meta interesting they Bought 200 million dollars worth of meta Stablecoin that they're never gonna Launch at this point silvergate stock
Has dropped over 90 percent since their All-time high in November of 2021. what Also was at the all-time high in November of 2021. that's right Atlanta Braves World Championship hopes that's Right that's when we won the World Series and here's what people were Wondering the market is down the crypto Contagion has taken over can it actually Get worse from here or from this point Forward is everything kind of baked in People already know that there's Problems with silvergate problems with Genesis is this going to result in Another large Market downturn or worse As of now silvergate is not down and out But without a doubt they are against the Ropes that's a boxing reference they're Above water for now silvergate going Completely insolvent it would be Cataclysmic I don't know how long it Would take crypto to recover from that It would eventually but it would take a Long time the implications were the 1300 Clients they serve would be crazy all Those exchanges would be losing their on And off ramps no one could put money on Or take money out silvergate crashing Will cause irreparable damage to crypto And his reputation because you know Crypto's already got a great reputation We don't want to see it go south thanks Sam let's hope the 60 of their employees Left find a way to write the ship think
If I remember correctly they just laid Off 40 of their employees but I think They also laid off 20 of their employees A couple months ago as well and now We've looked at the whole picture with Silvergate bank and this is what you Should walk away with silvergate bank Doesn't have to be a bad actor in order To hurt crypto the reason is they've Gotten too big too fast they didn't have Any competitors in this space for many Years now what we're seeing is Banks Wanting to come in slowly but surely Silvergates got all the clients so Whether it's now or whether it's later We could be due to see this again with Another company that they serviced like What we saw with FTX and Alameda so what We need to see we need to see silvergate Bank get broken up and we need to see Those institutional clients and crypto Spread out to other banks that way we Are seeing a deleveraging of the Disaster that would occur at silvergate Bank went down and if it did go down you Know what they would call it Silver Gate Gate it's all got to be blessed Thank you
